Industrial Relations in Different Countries

(1)

Industrial Relations in Different Countries

(2)

Industrial Relations in USA

USA

USA industrial relations

industrial relations system consists

system consists two

two

sectors:

a. Unionized sector

b.

b. Non

Non –

– union

union sector

sector

Non union sector of the A

Non union sector of the American workers are

merican workers are

dominating the workforce.

(3)

Industrial Relations in USA

USA

USA industrial relations

industrial relations system consists

system consists two

two

sectors:

a. Unionized sector

b.

b. Non

Non –

– union

union sector

sector

Non union sector of the A

Non union sector of the American workers are

merican workers are

dominating the workforce.

(4)

The

The national la

national labor

bor relations

relations act

act 1!"

1!" guaranteed

guaranteed to

to

labor the right to bargain through re#resentati$es of its

choosing.

This act had four im#ortant #ur#ose:

1. to #rotect the worker%s right to &oin a union of his

won choice and to organize without interference from

his em#loyers

'. to com#el the em#loyer to recognize and bargain

with the most re#resentati$e union

!. to #ro$ide for election machinery to determine the

most re#resentati$e union in any unit.

(. to forbid certain unfair labor #ractices in order to

coerce the em#loyers.

(5)

The mo

The most common

st common ty#e of

ty#e of Ame

American unio

rican union is

n is the

the

business union. )t stresse

business union. )t stresses economic ad$

s economic ad$antages to

antages to

be gained through

be gained through collecti$e action.

collecti$e action.

T

Ty

y#es of American

#es of American unions:

unions:

1. *raft union

'. )ndustrial unions

!. A+, – *)-  Affiliated unions/

)n 1""0 the congress of

)n 1""0 the congress of industrial organiza

industrial organization

tion

*)-/ merged with

*)-/ merged with the A

the American +ederation of

merican +ederation of

,abor A+,/.

A+, – *)- affiliates re#resent a##roimately three

– fourth of all union

(6)

The fundamental characteristics of the American labor

mo$ements are :

1. goals which are largely those of 2bread and butter%

unionism.

'. a strategy that is mainly economic

!. collecti$e bargaining as a central well de$elo#ed

acti$ity

(. relati$e bargaining as a central well de$elo#ed acti$ity

". strength $is3a3$is the em#loyer on the sho# floor

4. financial strength

5. ,eadershi# drawn largely from the rank – and – file

6. The etent of unionization $aries considerably by

occu#ation0 industry0 geogra#hic regions and gender.

(7)

The U.S. has one of the lowest rates of unionization of any ad$anced economy0 and the rate of unionization has fallen faster in the #ast !7 years than any other

industrialized country

American management o##oses unionism more than most other countries

U.S. unions are less tied to #olitics than other western nations

The trade deficit has emerged as a critical #olicy issue in light of regional trade #acts in recent years

(8)

Industrial Relations in Great Britain (UK):

A labor agreement in 8reat 9ritain is not a legally binding contract

iolations of the agreement by the union or by management carry no legal #enalties

9ritish unions are relati$ely #owerful and strikes are more #re$alent than in the United States

9ritish union membershi# has declined in recent years 9ritish labor agreements do not usually include

(9)

There distinctive characteristics of British industrial relations are:

1. the tradition of $oluntarism

'. the re#resentati$e of workers through trade union officers at work#laces in the form of sho# stewards !. the organization of trade union membershi# along occu#ational rather than industrial lines.

The normal method by which go$ernment assist conflict settlement are conciliation0 arbitration0 and in$estigation or formal in;uiry.

(10)

<ost of the large and im#ortant trade unions are affiliated to the Trade Union *ongress TU*/. The functions of

TU* are :

1. to do anything to #romote the interests of all or any of its affiliated organizations

'. to im#ro$e the general economic and social conditions or workers in all #arts of the world and to render them assistance where$er necessary.

!. to affiliate to or subscribe to or assist other

organizations ha$ing ob&ecti$es similar to those of the congress

(. to assist in the com#lete organization of all workers

eligible for membershi# to its affiliated organizations and to settle dis#utes between member of such organizations.

(11)

*ollecti$e bargaining remains the #rime method for regulating industrial relations in 9ritain.

The official third #arty #ro$ision should not undermine eisting collecti$e bargaining arrangements.

(12)

Industrial Relations in German

The distinguishing feature is codetermination

<andated by 8erman law and a##lies to all enter#rises whether or not they are union

T!o "e #arts to codetermination:

=m#loyee re#resentation on com#any boards and work councils

>ro$ides a #arallel form of re#resentation to em#loyees that is in addition to the union re#resentation

(13)

Board Re#resentation

8erman law mandates em#loyee re#resentation on su#er$isory boards

The number of re#resentati$es $aries by the size of the firm and industry0 with s#ecial #ro$isions for coal and steel industries

German firms have a t!o$tiered %oard structure

The su#er$isory board Aufsichtsrat/ is the higher ranked board )t has the res#onsibility to control managerial #erformance and a##oint to# managers

The lower managing board orstund/ runs the firm on a day3to3 day basis

=m#loyee re#resentati$es to the su#er$isory board are elected #ro#ortionately from the blue and white collar workforce

(14)

&or" Councils

?ork councils are the second ma&or com#onent of the 8erman codetermination structure

<andated by law for #ri$ate firms with fi$e or more em#loyees

?ork councils ha$e rights to information0 consultation0 and codetermination

The law re;uires negotiation with work councils for ma&or o#erational changes

?orks councilors are elected by all em#loyees in a firm regardless of union affiliation

?orks councilors cannot call a strike0 but can sue

(15)

Union Re#resentation and Structure

Unions #lay an im#ortant role in the 8erman industrial relations system

Unions re#resented '"@ of the 8erman work force in '77(

Union membershi# as a #ercentage of the workforce has been steady since 147

After unification0 unions etended their &urisdiction to the former =ast 8ermany

Unions #layed a role in the restructuring of the =ast 8erman unions are also acti$e in #olitical and social issues

(16)

Collective Bar'ainin' in German

*ollecti$e bargaining in 8ermany is highly centralized <ost agreements are reached at the regional or industry le$el

The most im#ortant unions in the #ri$ate sector re#resent workers in one or more industries

ecently0 a su#er union0 erdi0 re#resenting workers in the ser$ice sector0 was formed by amalgamation with a number of #ri$ate and #ublic sector unions

8erman law does not gi$e eclusi$e re#resentation rights <ore than one union commonly re#resents workers

=m#loyers commonly re#resented by associations in regional bargaining

-nce an agreement is reached0 the terms are etended by law to other em#loyees and firms in that industry

(17)

Industrial Relations in a#an

nter#rise Unionism

The distinguishing feature of Ba#anese industrial relations is the central role of enter#rise unions

They re#resent both white and blue collar em#loyees regardless of occu#ation and include management staff

-nly high le$el managers do not belong

New em#loyees automatically become union members and #ay dues through a dues check3off system

Union and m#loer *ederations

=nter#rise unions are commonly associated with federations0 which are affiliated with confederations

=m#loyers commonly belong to counter#art federations

9argaining is between the enter#rise union and management of the firm0 but some industry le$el bargaining does occur

(18)

The +ifetime m#loment ,rinci#le

Ba#anese firms0 #articularly large ones0 tend to hire new

em#loyees u#on graduation from either high school or college =m#loyees tend to stay until retirement

)f a firm faces a financial crisis0 it may try to shift workers to other firms in their trading grou#0 which are firms linked by common ownershi# or business ties

=tensi$e cross training of workers facilitates these shifts )n addition0 workers retire relati$ely early in Ba#an at the a$erage age 4(

The use of many #art3time workers hel# firms to kee# the lifetime #romise

?ages are 1"3!7@ lower in smaller firms0 and there is less em#loyment security

(19)

,a Determination in a#an

<ost #ay agreements are set in annual negotiations between a firm and the enter#rise union

<any negotiations occur in s#ring offensi$e0 or CShuntoD

?orkers are ty#ically #aid a salary0 #lus a bonus of u# to fi$e months #ay

Seniority im#acts #ay and thus age is a factor/ >erformance a##raisals u# to twice #er year with #erha#s a 17@ annual bonus for good a##raisals

(20)

The Role of Consultation in a#anese Industrial Relations

The labor relations system in Ba#an relies hea$ily on consultation between labor and management to settle dis#utes

8rie$ance #rocedures are rarely used

Union membershi# density/ is falling in Ba#an !"@ of the labor force from the 1"7s315!

1.'@ in '77(

*ritics see enter#rise unionism as the co3o#tion of inde#endent unionism

-thers see its success in conflict resolution0 em#loyee commitment0 and economic security

(21)

Industrial Relations in China

The *hinese economy has shifted from a command economy to a more market3led one

An increasing em#hasis is being #laced on the role of the collecti$e contract system

)ntegration of trade unions into work#lace management continues to #re$ent collecti$e consultation from

#ro$iding an ade;uate framework for the full freedom and regulation of labor relations

,abor relations in *hina has become a #oint of contention in international trade and human rights discussions

(22)

(23)

• *ross3cultural difference in industrial relations )/ and collecti$e bargaining eist because:

– The conce#t

– ,e$el of negotiations

– -b&ecti$es

– )deology

– Structures

– ules and regulations

• *ross3cultural differences also emerge as to the enforceability of collecti$e agreements.

(24)

+actors underlying Eistorical Fifferences

in Structures of Trade Unions

• <ode of technology and industrial organization at critical stages of union de$elo#ment

• <ethods of union regulation by go$ernment

• )deological di$isions within the trade union mo$ement

• )nfluence of religious organizations on trade union de$elo#ment

• <anagerial strategies for labor relations in large cor#orations.

(25)

Union Structures

• _{Fiffer considerably among countries}

• ) #olicies must be fleible enough in order to ada#t to local traditions and institutional re;uirements.

– )ndustrial unions – e#resent all grades of em#loyees in an industryG

– *raft unions – 9ased on skilled occu#ational grou#ings across industriesG

– *onglomerate unions – e#resent members in more than one industryG

– 8eneral unions – -#en to almost all em#loyees in a gi$en country.

– =nter#rise union 3 a single trade union within one #lant or multi3#lant enter#rise0 rather than within a craft or industry0 common in Asia3>acific countries.

(26)

Trade Union Structures in +eadin'

&estern Industrial Societies

Australia General, craft, industrial, white-collar

Belgium Industrial, professional, religious, public sector Canada Industrial, craft, conglomerate

Denmark General, craft, white-collar

Finland General, white-collar, professional and technical enterprise Great Britain General, craft, industrial, white-collar, public sector

Japan Enterprise

The Netherlands Religious, conglomerate, white-collar Norway Industrial, craft

Sweden Industrial, craft, white-collar and professional Switzerland Industrial, craft, religious, white-collar

US Industrial, craft, white-collar, public est Germany Industrial, white-collar

Table 10-1

(27)

The *hallenge to the <ultinationals

• _{Standardization $s. local ada#tation}

(28)

Fifference in <N= A##roached to

)nternational )ndustrial elations

• _{Fegree of centralization or decentralization}

can be influence by se$eral factors:

– Fegree of inter3subsidiary #roduction integration

– Nationality of ownershi# of the subsidiary

– )E management a##roach

– <N= #rior e#erience in industrial relations

– Subsidiary characteristics

– _{*haracteristics of the home #roduct market} – <anagement attitudes towards unions

(29)

Fegree of )nter3subsidiary >roduction

)ntegration and ),

• Eigh degree of integration was found to be the most im#ortant factor leading to the centralization of the ) function within the firms studied.

• )ndustrial relations throughout a system become of direct

im#ortance to cor#orate head;uarters when transnational sourcing #atterns ha$e been de$elo#ed0 that is0 when a subsidiary in one

country relies on another foreign subsidiary as a source of com#onents or as a user of its out#ut.

• )n this contet0 a coordinated industrial relations #olicy is one of the key factors in a successful global #roduction strategy.

(30)

Nationality of -wnershi# of the

Subsidiary

• US firms tend to eercise greater centralized control o$er labor relations than do 9ritish or other =uro#ean firms.

• US firms tend to #lace greater em#hasis on formal management controls and a close re#orting system #articularly within the area of financial control/ to ensure that #lanning targets are met.

• *orei'n$o!ned multinationals in Britain #refer single3em#loyer bargaining rather than in$ol$ing an em#loyer association/0 and are more likely than

9ritish firms to assert managerial #rerogati$e on matters of labor utilization.

• US$o!ned su%sidiaries are much more centralized in labor relations decision making than the British$o!ned0 attributed to:

– <ore integrated nature of US firms

– 8reater di$ergence between 9ritish and US labor relations systems than between 9ritish and other =uro#ean systems0 and

(31)

)E <anagement A##roach

• An ethnocentric #redis#osition is more likely to be associated with $arious forms of industrial relations conflict.

• *on$ersely0 more geocentric firms will bear more

influence on host3country industrial relations systems0 owing to their greater #ro#ensity to #artici#ate in local e$ents.

(32)

>rior =#erience in )ndustrial

elations

• =uro#ean firms tend to deal with industrial unions at industry le$el fre;uently $ia em#loyer associations/ rather than at the firm le$el.

• The o##osite is more ty#ical for U.S. firms

• )n the U.S.0 em#loyer associations ha$e not #layed a key role in the industrial relations system0 and firm3 based industrial relations #olicies are the norm.

(33)

Subsidiary *haracteristics

• Subsidiaries formed through ac-uisition of well3established indigenous firms tend to be gi$en much more autonomy o$er industrial relations than are 'reen$field sites.

• 8reater inter$ention would be e#ected when the subsidiary is of key strate'ic im#ortance to the firm and when the su%sidiar is oun'.

• ?here the #arent firm is a significant source of o#erating or in$estment funds for the subsidiary – a subsidiary is more

de#endent on head-uarters for resources – there will tend to be increased cor#orate in$ol$ement in industrial relations and human resource management.

• ,oor su%sidiar #erformance tends to be accom#anied by increased cor#orate in$ol$ement in industrial relations.

(34)

*haracteristics of the Eome >roduct

<arket

• _{,ack of a large home market is a strong incenti$e to}

ada#t to host3country institutions and norms.

– )f domestic sales are large relati$e to o$erseas o#erations as is the case with many US firms/0 it is more likely that o$erseas o#erations will be regarded as an etension of domestic o#erations.

– +or =uro#ean firms0 international o#erations are more like to re#resent the ma&or #art of their business.

– Since the im#lementation of the Single =uro#ean <arket0 there has been growth in large =uro#ean3scale com#anies formed $ia

ac;uisition or &oint $entures/ that centralize management organization and strategic decision3making.

– Eowe$er0 #rocesses of o#erational decentralization with regard to industrial relations are also e$ident.

(35)

<anagement Attitudes towards Unions

• Hnowledge of management attitudes or ideology concerning unions #ro$ides a more com#lete e#lanation of multinational industrial

relations beha$ior than relying solely on a rational economic model.

– *om#etiti$eIconfrontational $ersus coo#erati$e – *odetermination

– ?orks council

• Union density in western industrial societies

– Sweden has the highest le$el of union membershi# – U.S. managers tend to hold a union a$oidance $alue

(36)

Table

10-2

Union membership for selected

(37)

Union Fensity and 9argaining *o$erage

by >ercentage

Country Union ensity Co!erage "ercentage change #$%&-'&&(

U)*) '&&+ #') #() -##)# Canada '&&+ (&)( (')+ -.) U)/) '&&+ ') ()& -#) 0etherlands '&&# ')& ')& -#+)' *weden '&&( %)& $')& #&)( 1inland '&&# %#)' $)& '') 1rance '&&( )( $)& -#()+ 2ustria '&&' ()+ $$)& -'%)( Germany '&&( ''). .()& -$) 3apan '&&( #$). '() -#)+

(38)

Union Fensity ates in the +ace of

Socioeconomic *hanges

Countr ,rivate ,u%lic .ale *emale

U.S. '77( 5. (4.( 1!.6 11.1 *anada '77( 15.6 5'.! !7.4 !7.! U.H. '77( 15.' "6.6 '6." '.1 Austria 16 '.6 46." ((.7 '4.6 +rance '77! ".' 1".! .7 5." 8ermany 15 '1. "4.! '.6 15.7 Netherlands '771 ''.( !6.6 '.7 1.7 Norway 16 (!.7 6!.7 "".7 47.7 Sweden 15 55.7 !.( 6!.' 6." +inland '771 "".! 64.! 44.6 5".4

Source: data adapted from Eurofund 2004

(39)

Union <embershi# by 8ender

•

_{<ore women} in the union – Sweden – Norway – _+inland

•

_{=;ual gender} #artici#ation in the union – *anada – U.H. – _)reland 

More men in

the union

 U.S.  Germany  Austria  Netherland s  Japan

(40)

Hey )ssues in )nternational

)ndustrial elations

• National differences in economic0 #olitical and legal systems #roduce markedly different ) systems across countries

• _{<ultinationals generally delegate the management of ) to their}

foreign subsidiaries. Eowe$er0 a #olicy of decentralization should not kee# cor#orate head;uarters from eercising some coordination o$er ) strategy.

• 8enerally0 cor#orate head;uarters will become in$ol$ed in or o$ersee labor agreements made by foreign subsidiaries because these agreements may affect the international #lans of the firm andIor create #recedents for negotiations in other countries.

(41)

Se$en *haracteristics of <N=s as the

Source of Trade Union *oncern

• +ormidable financial resources

• Alternati$e sources of su##ly

• _{The ability to mo$e #roduction facilities to other countries} • A remote locus of authority

• >roduction facilities in many industries

• Su#erior knowledge and e#ertise in industrial relations

• The ca#acity to stage an 2in$estment strike%

efuse to in$est any additional funds in a #lant0 thus ensuring that the #lant will become obsolete and economically non3com#etiti$e -ffshoring

(42)

The es#onse of Trade Unions to

<ultinationals

• The res#onse of labor unions to multinationals has been threefold:

– +orm international trade secretariats )TSs/

– ,obby for restricti$e national legislation0 and

– Try to achie$e regulation of multinationals by international organizations.

• )nternational trade secretariats )TSs/.

– There are 1" )TSs0 which function as loose confederations to #ro$ide worldwide links for the national unions in a #articular trade or

industry e.g. metals0 trans#ort and chemicals/.

– The secretariats ha$e mainly o#erated to facilitate the echange of information.